Three Ways to Say Sayonara to Debt Stress

A survey released recently by GoBankingRates and conducted by Google Consumer Surveys found that paying off debt was the number one money stressor for Floridians.

People have likened carrying debt to running on a treadmill, being trapped under a boulder, or trying to climb a mountain. They feel like they will never outrun, get out from under, or rise above the mounting pressures that debt often brings. And forget about trying to build a savings account.

At Bank of America, we offer control and flexibility to our customers when assessing debt - like through checking accounts that ensure customers don't spend money they don't have, free educational tools, or banking when and where they want through our Online and Mobile Banking capabilities.

We also offer steps that anyone can take to start reducing debt and building savings. Below are the top three:

1. Take stock of your debt: First things first, understand what you owe. Make a list of all your monthly credit card and loan statements. For each bill, include:

• The creditor's name
• The total amount you owe on that bill
• The minimum required monthly payment
• The interest rate (also known as APR)
• The payment due date

2. Hone in on your target: You can start with the bill carrying the highest interest, or the one with the smallest balance. Prioritizing the highest-rate debt can save you more money: you pay off your most expensive debt sooner. Paying off the smallest debt can eliminate a bill faster, providing a motivating boost. Whichever you choose, make sure to pay at least the minimum on all your debts.

3. Combine and conquer

Consolidating your debt can let you combine several higher-interest balances into one with a lower rate, so you can pay down your balance faster without increasing payment amounts. Here are 2 common ways to consolidate debt:

• Take advantage of a low balance transfer rate to move debt off high-interest cards. Be aware that balance transfer fees are often 3%-5%, but the savings from the lower interest rate may often be greater than the transfer fee.
• If you have equity in your home, you may be able to use it to pay down card debt. A home equity line of credit may offer a lower rate than what your cards charge. Be aware that closing costs often apply, but an extra benefit is that home equity interest payments are often tax-deductible.

Chad Clark is a small business banker at Bank of America.